Seven rules for running a happy family business

‘Running a family business is so rewarding’ ‘Running a business with family members is like walking through a minefield, blindfold!’

I wonder which one of the above statements you identify with most? If you’re like me, you probably switch between the two.

A family business is a unique proposition. On the one hand you’ve got people you trust implicitly, on the other hand you can find yourself walking a tightrope, between highly qualified employees and family members who see it as their right to automatic promotion and progress within the family firm.

Promote the family member and you risk alienating the non-family member, fail to promote the family member and you face the prospect of a lonely Christmas with an M&S meal for one!

Joking aside, when you’re at the head of a family firm, keeping the peace can be a major distraction, and prevent you from taking the business forward.

The benefits of keeping it in the family.

Some the main drivers for employing family members are, they won’t rob you, they’ll work longer hours, they’ll provide a shoulder to cry on when times are tough, they’ll provide a succession route when you want to retire and they’ll tell you when a non-family staff member is behaving inappropriately.

. When a family business is going well life is good. When everyone is pulling together and can see the common goal, you’ll have a very effective family team working together to make the business a success you can achieve that elusive work/life balance that business owners everywhere are striving for.

But If it starts going wrong it’s not only business that suffers. There’s no escape on the home front if family members are falling out at work. Here a few golden rules for playing Happy Families in the business, so you can enjoy family life too.

Seven rules for running a happy family business

1. Treat family members like employees during office hours.

This may be easier said than done, especially with younger members of the family who don’t really understand the importance of maintaining a professional air at all times.

2. Make sure they have a regular appraisal/performance review.

Obviously family members will be treated differently from other staff members, but it’s very important to treat everyone in the company fairly. It’s natural for non-family members of the team to feel they are being left out in favour of a family member of equal status, so an annual review is a great way of demonstrating that family members of the team are held to account in exactly the same way as other members of the team.

Of course if you find a deficiency in your family members performance during an annual review then you have to take action to correct it, that’s where the balancing act comes in!

3. Try not to talk ‘shop’ at home

Easier said than done, when you’re working together all day it’s very easy to slip into the habit of taking work conversations home. Many family businesses make ‘no business at the dinner table’ a golden rule, but from personal experience I find it very difficult to maintain.

So personally I would try to ensure a happy balance, have some activities that take your mind off work, play tennis, golf or go for swim, try to do something new and unrelated to work that takes your full concentration, I found learning to sail ticked all these boxes, with the added incentive of not getting wet if your concentration lapsed!

4. Explain exactly what you expect of them.

From the outset they have to realise they will be expected to contribute just the same as non-family of the team, it’s no good for either party if the perception is they’ve been handed the job ‘on a plate’, they won’t respect the job or the MD.

So you need to set out very clearly what’s expected of them, you may think this ‘Victorian mill owner’ approach is a bit draconian, but if you get it wrong at the start you’ll have a terrible job trying to put it right later

Tell them how much they will be paid, how many hours they will have to work, the rules on using a mobile phone in the work place, taking extended lunch breaks, talking on the company phone to their friends. These things may seem basic, and if it was anyone other than a family member you wouldn’t think twice, so why should it be any different for your niece, nephew, cousin or Auntie?

5. Explain exactly what they should expect from you

Just as the previous point details how the family employee can sometimes expect an easy ride, this point makes clear that you can’t expect them to go ‘above and beyond’.

At no point is this a one way street, from either party’s point of view. You need to lay out in clear terms what they will receive in return for the stated hours, any work they do outside of these hours should be rewarded, that might not necessarily be a cash reward, but it should be clear what the reward is and why they’re receiving it.

6. Golden child syndrome

Staff will assume the boss’s child will always get preference, some staff will have a problem with this, no matter what you do, they’ll feel that the ‘golden child’ has come in and stolen their thunder.

Equally, some children will enter the family firm ‘to the manor born’, there should be no sense of entitlement. The best family businesses ensure that the next generation starts on the ‘shop floor’, it doesn’t matter if you’re a manufacturing business, a telesales organisation, or an international multi-platform operation there will people who have worked for the business for many years, the accumulated knowledge these people hold is pure gold dust, the upcoming future MD, may have a degree a masters and an MBA, but they don’t have 35 years’ experience of actually making the product, selling the service or greeting the public, common sense is a precious commodity.

7. NEVER wash your dirty linen in public.

All family relationships get strained at times, the added pressure of running a business which keeps a roof over the heads of family members sometimes strains those relationships to breaking point.

Larger family businesses will have a board room or some other space where disputes can be aired and resolutions put in place, smaller businesses need to go offsite and take the problems with them.

The fastest way for a business to lose credibility is for the senior management team to ‘fall out’ in public, not only that but it’s a great source of gossip, rumours can start and before you know it all kinds of stories are doing the rounds, your competitors will lap it up and regurgitate it to your clients, and staff members, both family and non-family will start to worry if their job is safe.

Make it a rule to keep family matters at home.

Following these rules will make help you keep family and business life running as smoothly as possible.

About Me

Small businesses make up the vast majority of the UK economy, we employ more people, generate more tax revenues and create more wealth than the rest of the UK economy put together.

All businesses need a little help from time to time, that maybe the oversight of a Non Executive Director, or an interim manager who offers help and support at a time of need or crisis or simply an outside eye to offer support and pracical advice at regular intervals.

I've been involved in small and medium-sized businesses for over 30 years. My first career was in the Hospitality sector, I then moved into temporary healthcare staffing, healthcare provision and finally international recruitment.

I've been involved in businesses that experienced extraordinary growth, and stagnation. Both can be problematic and need management, different styles of management, but management none the less.

Many issues draw a business owner away from their primary role; to strategise, to ensure success and make sure the business is still trading a year from now. Often, that re-focusing requires an outside eye, that's where a good business adviser is invaluable.

I offer practical no-nonsense advice and support. I can't honestly say I've seen every eventuality that a business may encounter, I don't believe anyone can, however when times get difficult, as they do in all businesses, it's good to have someone you can call on who's prepared to roll up their sleeves and get stuck in.